The Pound (GBP) advanced against the US Dollar (USD) on Tuesday after the American currency was weakened by softer than forecast Durable Goods data.
According to the Washington based Commerce Department, orders for durable goods fell unexpectedly last month by 1.3%, economists had been forecasting a rise of 0.5%. The fall marks a second consecutive month of declines.
Core durable goods orders, which strip out volatile goods, declined by 0.2% in September, disappointing expectations for a gain of 0.5%. The fall marked the biggest drop in eight months.
‘Clearly businesses seem a little worried, not so much about US growth but global growth, so they’re being very cautious. The worry is they retreat back into their shells,’ said Nariman Behravesh, chief economist at IHS Inc.
Consumer Confidence Data Restrains Losses
Further losses for the US Dollar were restrained following the publication of the separate Conference Board Consumer Confidence data. The report showed that sentiment amongst American consumers climbed to its best level in seven years in October, increasing optimism over the health of the world’s largest economy.
The Conference Board’s Index of consumer confidence rose to a reading of 94.5 in October, a large ump from the 89.0 seen in September. Analysts had been expected the index to have declined to 87.0.
‘A more favourable assessment of the current job market and business conditions contributed to the improvement in consumer views of the present situation,’ said director of the Conference Board Consumer Research Centre Lynn Franco.
Following the release of the data the ‘Greenback’ managed to pare back some the losses it sustained against the Euro and other peers.
Economist attention will now focus to the conclusion of the Federal Reserve’s two day policy meeting on Wednesday. Concerns over a slowdown in the global economy have caused a number of investors to pare back their bets for an interest rate hike to occur this year, many are now expecting a rate rise next summer at the earliest.
The Fed is likely to announce the conclusion of its asset purchasing stimulus program, known as quantitative easing, but was also expected to reassure markets that interest rates will remain on hold for some time to come.
The Fed is also expected to announce the ending of its monthly quantitative easing programme, which it has been tapering for much of the year. The move will support the US Dollar. Also due for release on Wednesday will be the latest US
Mortgage applications data for the week ending on October 20.
UPDATE
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.6122.
As traders await the Federal Reserve interest rate decision, the US Dollar is generally holding relatively steadily against its major peers. With US data proving less-than-satisfactory on Tuesday, many economists have speculated that the quantitative easing stimulus will be sustained for a further month. Should this occur, the US Dollar is almost certainly going to decline against the majority of its most traded peers.
Sterling, meanwhile, has softened fractionally as traders await the British data due for publication later on Wednesday morning.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6187 ,
US Dollar,,Euro,0.7852 ,
US Dollar,,Canadian Dollar,1.1171 ,
US Dollar,,Australian Dollar,1.1304 ,
Pound Sterling,,US Dollar,1.6166 ,
Euro,,US Dollar,1.2738 ,
[/table]
